HomeMy WebLinkAbout7C - Onsite Engineering
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
CITY COUNCIL AGENDA REPORT
May 16, 2005
7C
JOHN SULLIVAN, COMMUNITY DEVELOPMENT
DIRECTOR
PUBLIC HEARING TO CONSIDER APPROVAL OF A
RESOLUTION APPROVING A CONTACT FOR PRIVATE
DEVELOPMENT, BUSINESS SUBSIDY AND BUSINESS
SUBSIDY AGREEMENT BETWEEN THE CITY OF PRIOR
LAKE AND ONSITE ENGINEERING AND FORENSIC
SERVICES, INC.
Introduction:
The purpose of this item is to consider the following:
1. Hold a public hearing to consider approval of a
Contract for Private Development, Business Subsidy,
and a Business Subsidy Agreement between the City
of Prior Lake and Onsite Engineering and Forensic
Services, Inc.
2. Consider a Resolution approving same.
Background:
In accordance with Minnesota State Statute 116J.993, the
City of Prior Lake adopted a Business Subsidy Policy on
October 18, 2004 to establish guidelines and criteria
regarding the use of business subsidies, such as Tax
I ncrement Financing (TI F), tax abatement, and other
business subsidies for private development projects within
the City of Prior Lake.
In accordance with the Business Subsidy Policy, the City is
required by State Statutes to enter into a Business Subsidy
Agreement with Onsite Engineering and Forensic Services,
Inc. The specific Business Subsidy and terms are outlined in
the attached Business Subsidy Agreement.
www.cityofpriorlake.com
Phone 952.447.4230 / Fax 952.447.4245
Also, as required by State Statutes and as has been past
practice with all applicants for TIF, the City enters into a
private development contract (Development Agreement).
CURRENT
CIRCUMSTANCES: The proposed project is located within Development District
No.4. TIF District 4-1 is a 10 year Economic Development
District. The project site is Lot 1, Block 1, Deerfield Industrial
Park 3rd Addition. The company, Onsite Engineering and
Forensic Services, Inc. is proposing to construct an 8,119
square foot facility to operate research and development,
testing and warehousing activities. The proposed business
subsidy is "pay as you go" Tax Increment Financing, which
has gross tax increment finance proceeds of approximately
$104,590 over the duration of the district.
The proposed project will achieve the following public
purpose objectives: the retention and creation of local jobs
with a number and diversity that will offer stable employment
and attractive wages and benefits; the diversification of the
City of Prior Lake's tax base; and to achieve development on
sites that would not be developed without business subsidies
assistance.
In accordance with the City Business Subsidy Policy and
included in the Business Subsidy Agreement, Onsite
Engineering and Forensic Services, Inc. is promising the
City that:
Within the next two years from the date of the Business
Subsidy Agreement, the company plans to accomplish the
retention of its 3 full time employees. Two jobs are
described as an electrical engineer at an annual salary of
$50,000 plus full benefits, and another job described as a
technician/pilot at an annual salary of $40,000 plus full
benefits. The project will create at a minimum, one full time
engineer at an annual salary of a minimum of $40,000 per
year plus full benefits and one full-time support staff at an
annual salary of a minimum of $18,000 per year plus full
benefits.
As part of the Business Subsidy Agreement, the company
will be required to submit annual reports to the City certifying
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the compliance with the agreement and wage and job goals
outlined therein.
ISSUES:
The Development Agreement is substantially complete. The
City Attorney has requested to revise certain provisions in
the Agreement. Those changes will be made shortly.
Unfortunately, we do not have the finalized Development
Agreement available for execution tonight.
The Development Agreement for the TIF and this project is
similar in form and substance to Tl F Development
Agreements approved previously by the City Council. Each
Development Agreement is customized to the particular Tl F
provisions and project scope.
Staff requests the City Council authorize the Mayor and City
Manager to execute the finalized Development Agreement,
subject to the changes recommended by the City Attorney.
Staff also requests the City Council to consider approval of
the Business Subsidy Agreement, which was reviewed and
approved by the City Attorney.
FINANCIAL
IMPACT:
The proposed project will result in approximately $105,000 of
property tax revenues being retained to assist this project.
Property taxes after 9 years will be distributed to the
appropriate taxing jurisdictions. This project will also add to
the job and tax base of Prior Lake.
ALTERNATIVES: 1.
Adopt Resolution #05-xx, approving a contract for
private development between the City of Prior Lake
and Onsite Engineering and Forensic Services, Inc.,
as well as the Business Subsidy and Business
Subsidy Agreement between the City of Prior Lake
and Onsite Engineering and Forensic Services, Inc.
2.
Further discuss this issue and direct staff to provide
additional information to the Council.
3.
Deny the Resolution and Business Subsidy
Agreement
RECOMMENDATION:
Alternative #1.
ATTACHMENTS: 1.
2.
Resolution #05-xx
Business Subsidy Agreement between the City and
Onsite Engineering and Forensic Services, Inc.
A RESOLUTION APPROVING A CONTRACT FOR PRIVATE
DEVELOPMENT BETWEEN THE CITY OF PRIOR LAKE AND
ONSITE ENGINEERING AND FORENSIC SERVICES, INC.
MOTION BY:
SECOND BY:
WHEREAS, The City is currently administering Development District No.4
("Development District") pursuant to Minnesota Statutes, Sections 469.124 to
469.134, all inclusive, as amended; and
WHEREAS, Among the activities to be assisted by the City in the Development
District is the subdivision and development of parcel number 25-428001-0 known
as the project site; and
WHEREAS, There has been presented before the Council a Contract for Private
development (the "Contract") between the City and Onsite Engineering and
Forensic Services, Inc. (the "Developer"), setting forth the terms and conditions of
development of the project site and the City's participation in that effort; and
WHEREAS, The Contract provides for certain financial assistance by the City that
constitutes a "business subsidy" exceeding $100,000 within the meaning of
Minnesota Statutes, Section 116J.993 to 116J.995 (the "Business Subsidy Act");
and
WHEREAS, The "business subsidy agreement" as required under the Business
Subsidy Act is included in the Contract, and the City has on this date conducted a
duly noticed public hearing regarding the business subsidy agreement at which all
interested persons were give an opportunity to be heard; and
WHEREAS, The Council has reviewed the Contract and finds that the Business
Subsidy Agreement is in the best interest of the City and its residents.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR
LAKE, MINNESOTA,
1. The recitals set forth above are incorporated herein.
2. The Contract as presented to the City Council, including without limitation,
the Business Subsidy Agreement, is hereby in all respects approved, subject
to modifications that do not alter the substance of the transaction and that
www.cityofpriorlake.com
Phone 952.447.4230 / Fax 952.447.4245
are approved by the Mayor and City Manager, provided that execution of the
documents by such officials shall be conclusive evidence of approval.
3. The Mayor and City Manager are hereby authorized to execute on behalf of
the City any documents needed to carry out the Contract or the Business
Subsidy Agreement requiring execution by the City.
PASSED AND ADOPTED THIS 16th DAY OF MAY, 2005.
YES
NO
Haugen Haugen
Fleming Fleming
LeMair LeMair
Petersen Petersen
Zieska Zieska
Frank Boyles, City Manager
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BUSINESS SUBSIDY AGREEMENT
This Business Subsidy Agreement is entered into this 16th day of May, 2005, by and
between the City of Prior Lake, a Minnesota municipal corporation (the "City") and Onsite
Engineering and Forensic Services, Inc. a Minnesota S Corporation, and its heirs and assigns.
Recitals
WHEREAS, Minnesota Statues 116J.993 allows a City to adopt a Business Subsidy Policy to
establish guidelines and criteria regarding the use of business subsidies, such as tax increment
financing (TIP), tax abatement, and other business subsidies for private development projects
within the City of Prior Lake; and
WHEREAS, on October 18, 2004 the City adopted a Business Subsidy Policy and which policy
is incorporated be reference herein; and
WHEREAS, the City's Business Subsidy Policy is to achieve one or more public purpose
objectives set forth therein; and
WHEREAS, Onsite Engineering and Forensic Services, Inc. has proposed to build a 8,119
square foot facility for purposes of research and development, testing and warehousing for the
insurance and forensics industry (project) and the project meets the objectives in the City's
Business Subsidy Policy
WHEREAS, the proposed project will achieve more than one public purpose objective,
including specifically the retention and creation of local jobs with a number and diversity that
will offer stable employment and attractive wages and benefits; the enhancement and
diversification of the City of Prior Lake's tax base; and to achieve development on sites that
would not be developed without business subsidies assistance; and
WHEREAS, the City desires to provide Onsite Engineering and Forensic Services, Inc. with a
business subsidy in the form of a "pay-as-you-go" Tax Increment Finance Economic
Development District; and
WHEREAS, the proposed project is consistent with the City 2030 Comprehensive Plan and
Vision Statement.
1. The recitals set forth above are incorporated herein and made part of this agreement.
2. Description of the Business Subsidy. Onsite Engineering and Forensic Services, Inc., is
situated at 5714 Graystone Court SE Prior Lake, MN 55372 and is legally described as Lot 1,
Block 1, Deerfield Industrial Park 3rd Addition, City of Prior Lake, Scott County, Minnesota.
The parcel number is 25-428001-0. The subsidy is intended to assist the property owner in
partial land acquisition (land write-down) using Pay-As-You-Go Tax Increment Finance (TIF)
assistance. The TIF Subsidy would consist of a 10 year Economic Development District, and
DN: 231222
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establish TIP District 4-1 for Onsite Engineering and Forensic Services, Inc. Onsite Engineering
and Forensic Services, Inc. is to build a new building on Lot 1, Block 1 Deerfie1d Industrial Park
3rd Addition of 8,119 sq. ft. for the purposes of conducting their business in accordance with the
City of Prior Lake zoning and building codes.
A. Development Agreement: This Business Subsidy Agreement is made
pursuant to a Development Agreement by and between the EDA and Onsite
Engineering and Forensic Services, Inc. dated , 2005 relating
to the Tax Increment Finance Assistance (TIF) Onsite Engineering and
Forensic Services, Inc. will receive from the EDA.
B Statement of Need for Business Subsidy. The applicant recognizes the need for
a business subsidy to assist with the land acquisition costs to make the project affordable.
Furthermore, the applicant states that without the subsidy the project could not move forward (in
accordance with the state required and completed "But For" test).
C. Public Purpose Statement. The EDA also recognizes the importance of the
creation of higher wage job opportunities with benefits; retention and expansion of existing Prior
Lake businesses; and diversifying and enhancing the tax base is the cornerstone of the 2004
Business Subsidy Policy and 2004 Tax Increment Finance Policy of the City of Prior Lake.
In consideration of the mutual promises and covenants set forth herein, and the
understanding of and sufficiency of are not disputed, the parties hereto agree as follows:
3. Wa2e and Job Goals of the Proiect. As a condition to TIP District 4-1, Onsite
Engineering and Forensic Services, Inc. (the Project), and the use of Available Tax Increment in
connection with TIP District 4-1, Onsite Engineering and Forensic Services, Inc., on the terms
and conditions set forth in the Development Agreement, Company will meet the Wage and Job
Goals of the Project as they are outlined in Exhibit A, which is attached hereto and incorporated
by reference herein.
4. Repavment of Business Subsidy.
(a) As security for the Onsite Engineering and Forensic Services, Inc. compliance
with the Wage and Job Goals in Exhibit A, consistent with the City's Business Subsidy Policy
above, Onsite Engineering and Forensic Services, Inc. agrees that in the event it cannot achieve
the Wage and Job Goals outlined in Exhibit A it will repay the Business Subsidy pursuant to the
terms and conditions outlined in Exhibit B, which is attached hereto and incorporated by
reference herein.
5. Reportin2 Requirement.
(a) Annually, on March 1, commencing on the March 1 immediately following the
Benefit Date and continuing until the applicable report evidences satisfaction of the Wage and
Job Goals, or two (2) years, whichever is later, the company will furnish to the EDA a copy of
the Minnesota Business Assistance Form in substantially the form attached hereto as Exhibit C
ON: 231222 2
(as such form may be modified to comply with reporting requirements imposed by law including
Minn. Stat. Section 116J.994, Subdivision 7), covering the preceding 12 months, certified to be
accurate by the Chief Operating Officer or Director of Human Resources of On site Engineering
and Forensic Services, Inc.
(b) IfOnsite Engineering and Forensic Services, Inc. does not file a report by the due
date set forth in subparagraph (a), above, the EDA will mail a warning to Onsite
Engineering and Forensic Services, Inc. within one week of the filing date. If
Onsite Engineering and Forensic Services, Inc. does not file the report within 14
days after the postmarked date of the warning, Onsite Engineering and Forensic
Services, Inc. must pay the EDA a penalty of $100 for each subsequent day until
the report is filed. The maximum penalty shall not exceed $1,000.
Notwithstanding the forgoing notice requirement that Onsite Engineering and
Forensic Services, Inc. is delinquent in filing the Minnesota Business Assistance
Form, the City reserves the right to impose the aforementioned fine.
6. Five Year Commitment to City.
(a) Onsite Engineering and Forensic Services, Inc. acknowledges that it has received
a Business Subsidy in connection with the Project and, in consideration thereof, hereby agrees to
conduct the operations anticipated by the Development Agreement at the Project site, for at least
five (5) years after the Benefit Date, unless the consent of the EDA to a move from the Project
site is first obtained, which, subject to the provisions of subparagraph (b), below, shall not be
unreasonably withheld or delayed.
(b) If, during the five (5) year period referred to in subparagraph (a), above, Onsite
Engineering and Forensic Services, Inc. decides to move the operations which it was conducting
at the Project site to a location other than the Project site, Onsite Engineering and Forensic
Services, Inc. must first notify the EDA of such decision, including in its notification the specific
business reasons for such decision. Following receipt of such notice, the EDA will promptly
schedule and conduct the public hearing required by law.
7. Name and Address of Parent Corporation (if applicable). On site Engineering and
Forensic Services, Inc. does not have a parent corporation. All notices to Onsite Engineering and
Forensic Services, Inc. shall be served at the address specified in paragraph 10.
8. Other Business Subsidies Received for this Proiect.
Nothing herein shall preclude Onsite Engineering and Forensic Services, Inc. from
receiving additional financial assistance for the Project. Onsite Engineering and Forensic
Services, Inc. has received a total of SO in financial assistance from other grantors for the Project.
A complete list of all grantors and the amounts of financial assistance is attached to this
Agreement as Attachment 2.
9. Indemnitv.
DN: 231222 3
Onsite Engineering and Forensic Services, Inc. hereby agrees to pay, indemnify and hold
the EDA harmless from any and all costs, expenses and fees, including reasonable attorney's fees
that may be incurred by the EDA in enforcing this Agreement, provided the EDA is the
prevailing party.
10. Successors and Assiens.
This Agreement and all terms, conditions and obligations contained herein, shall run with
the Land and shall be binding upon and inure to the benefit of the EDA and Onsite Engineering
and Forensic Services, Inc., and their respective successors and permitted assigns.
11. Breach.. Notice.. and Remedies.
(a) Breach. If for any reason Onsite Engineering and Forensic Services, Inc. is unable to
meet the requirements of this Agreement, including, but not limited to, the requirement to
meet specific Wage and Job Goals, the Reporting Requirements and the Five Year
Commitment, then the Company will be deemed to be in breach of this Agreement.
(b) Notice. Once a breach has occurred, the EDA shall provide Onsite Engineering and
Forensic Services, Inc. written notice (the "Notice") of the breach. The Notice shall
include a description of the nature of the breach, a description of the actions or
accomplishments which must occur to cure the breach, and a reasonable time to cure the
breach which will be at least 15 days. Notices shall be sent to Onsite Engineering and
Forensic Services, Inc. at the address shown in the Development Agreement. Notice
shall be considered delivered two days from the date postmarked on the notice unless said
notice is personally delivered to the address set out above.
(c) Remedies. Ifa breach occurs and is not cured within a reasonable time, the EDA may
pursue any of its remedies at law or in equity including, but not limited to the following:
I. Repavrnent of the Subsidy. The EDA may, at its discretion, invoke requirement to
repay the Business Subsidy as outlined in Section 2 of this Agreement in the event
ofa breach of the Agreement.
II. Specific Performance. The parties hereto agree that, in the event of a default by
Onsite Engineering and Forensic Services, Inc. in the performance of the
obligations set forth in this Agreement, money damages as provided for in Section 3
shall not provide an adequate remedy. As a result, the parties understand and agree
that, in the event of a default by Onsite Engineering and Forensic Services, Inc. in
the performance of its obligations under this Agreement, the EDA shall be entitled
to also seek specific performance by Onsite Engineering and Forensic Services, Inc.
of this Agreement.
12. Term.
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The term of this Agreement shall be from the day and year first above written until the
date on which all of the requirements of this Agreement have been satisfied. This Agreement
shall specifically survive the termination of the (Development Agreement).
13. Attachments.
The following documents are hereby incorporated by reference and made a part of this
Agreement as if fully set forth herein:
1. Minnesota Business Assistance Form
2. Other Grantors and Financial Assistance to the Project
3. City of Prior Lake Business Subsidy Policy, adopted October 18, 2004.
4. City of Prior Lake Tax Increment Finance Policy, adopted October 18,2004.
IN WITNESS WHEREOF this Agreement has been duly executed and delivered by the
parties hereto as of the date above written.
Approved as to Form and Execution
CITY COUNCIL OF THE CITY OF
PRIOR LAKE, MINNESOTA
Its City Attorney, Suesan Lea Pace
Its City Manager, Frank F. Boyles
Its Mayor, Jack G. Haugen
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I
STATE OF MINNESOTA )
) ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this _ day of
2005, by , the City Manager of the City of Prior Lake, Minnesota, a
Minnesota public body, on behalf of said public body.
Notary Public
DN:231222 6
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Onsite Engineering and Forensic Services, Inc.
By
Its
STATE OF MINNESOTA )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this _ day of
2005, by (name), the (title) of On site
Engineering and Forensic Services, Inc., on behalf of said company.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY
AND WHEN RECORDED RETURN TO:
City attorney's name and address here
ON: 231222 7
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1
MINNESOTA BUSINESS ASSISTANCE FORM
[see attached 2005 MBAF Form, however, the recipient will need to submit Form 2006 when
made available by the State]
ON: 231222
Attachment 1 - 1
'~--~"1 -. ..- -.....
2
OTHER GRANTORS AND FINANCIAL ASSISTANCE
Grantor Amount of Financial Assistance
1. None None
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
ON: 231222
Attachment 2 - 1
EXHffiIT A
Wage and Job Goals for Onsite Engineering and Forensic Services, Inc.
Within the next two years from the date of this agreement, Onsite Engineering and Forensic
Services, Inc. plans to accomplish the following:
Retention: The company plans to retain its current 3 employees. Two jobs are described as
an electrical engineer at an annual salary of $50,000 plus full benefits, and another job described
as a technician/pilot at an annual salary of $40,000 plus full benefits, and:
Creation:
1. Create one full-time engineer at an annual salary of a minimum of $40,000 per year plus
full benefits.
2. Create one full-time support staff at an annual salary ofa minimum of$18,000 per year
plus full benefits.
ON: 231222 10
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EXHIBIT B
Business Subsidy Recipient's Failure to Meet Business Subsidy Goals
In the event Onsite Engineering and Forensic Services, Inc. does not meet the wage and job goals
established as part of this agreement, at a minimum, a recipient failing to meet goals must pay
back the assistance plus interest or, at the grantors option, to the account created under Minn.
Stat. 116J.551 provided that repayment may be prorated to reflect partial fulfillment of goals.
The interest rate must be set at the Implicit Price Deflator rate as defined under Minn. Stat.
116J.994, Subdivision 6.
ON: 231222 11
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